As in previous budgets, a huge chunk of Wayne Swan’s savings are actually tax rises or the closure of tax loopholes. He’s also targeted some relatively painless areas – big companies, public servants – for squeezing.
- The key one we know about already?—?the NDIS levy, which will generate around a quarter of Treasurer Wayne Swan’s $44 billion savings over Forward Estimates.
- As long foreshadowed by Assistant Treasurer David Bradbury, the government is getting serious about tax avoidance by transnationals, instituting a raft of measures to reduce profit-shifting and dodgy financial arrangements whereby foreign corporations minimize taxable income here; the government has also snuck in the removal of immediate deductibility for spending on mineral exploration. That will generate nearly $4.2 billion in additional tax over Forward Estimates, although predictions about generating additional tax revenue are notoriously optimistic.
- Changes to R&D tax incentives and monthly instalment payments for big PAYG taxpayers will generate around $3 billion over four years.
- Not listed as a “major savings” in the budget are the government’s recent changes to superannuation, though they’ll generate around $10 billion over the next decade.
- An extra $50 million a year in 457 visa charges.
- Ones we already know about it, either deliberately or through leaks – the higher education efficiency dividend, the cancellation of Family Tax Benefit-A rises on 1 July .
- The budget’s gutsiest decision, and probably the bravest one from Labor since it embraced a carbon price – dumping the Baby Bonus altogether from March next year and replacing with a much smaller increase in FTB-A payments ($2000 for first child, $1000 for subsequent children) paid in instalments. There will also be another of Labor’s indexation pauses to further slow the growth of family payments. That will all save $2.4 billion over Forward Estimates but will generate savings of well over $1 billion per annum beyond Forward Estimates?—?it’s a “quality cut” of the kind long called for by economists.
- Cuts to the Clean Energy Future package, mostly to carbon capture and storage (which will be welcomed by the Greens), a delay in funding for the Australian Renewable Energy Agency, the Clean Technology program and the Biodiversity Fund (which will not), assistance for workers at emissions-intensive coal mines. That will yield around $3.4 billion.
- $1.9 billion from slowing the growth in Australian overseas aid.
- $1.7 billion worth of health spending cuts?—?another area likely to prompt criticism for the government. In particular, the government is dumping the long-standing net medical expense tax offset, under which out-of-pocket expenses above $1000 became tax deductible.
- A range of further cuts to the public service: bureaucrats will literally have to squeeze closer together in the workplace to save space in new leases and major refits, they’ll have pay for parking where they don’t now and middle and senior management will be targeted for further reduction. Several agencies such as Foreign Affairs will suffer additional cuts, although Prime Minister and Cabinet will receive (another) funding increase.
Spending outside the government’s signature education and NDIS policies is limited in the budget?—?new spending including Gonski costs around $12 billion in total over Forward Estimates, but most of the initiative have already been announced, often months ago. Here are the highlights:
- Infrastructure: Around $3.1 billion in regional and urban infrastructure spending – although it is not new spending, as it has already previously allocated but not identified. Most if not all of the projects are already known. They’re upgrades of the Bruce Highway, Brisbane Cross River Rail and Melbourne Metro, the M4 and M5 extensions in Sydney and the F3-M2 connection, the Brisbane Gateway North Upgrade, Melbourne M80 Ringroad widening and Adelaide South Road Upgrade and regional projects in WA and Tasmania.
- Education: The previously-announced increase in early childhood worker salaries plus a continuation of the National Partnership Agreement on early childhood education, worth around $1.2 billion.
- Welfare: Around $1 billion in total for the Newstart income-free threshold lift, homelessness and around $430 million for the Royal Commission into Child S-xual Abuse
- ABC and SBS: Friends of public broadcasting rejoice: there’ll be further increases for the national broadcasters, some of which has already been announced?—?triennial funding of $90 million to the ABC for news and current affairs; triennial funding of an additional $20 million to SBS, plus a $90 million loan to the ABC to consolidate staff at its Southbank facility in Melbourne.